MINNEAPOLIS, April 8 /PRNewswire-FirstCall/ -- Health Fitness Corporation
(OTC Bulletin Board: HFIT) today announced financial results for the fourth
quarter and year ended December 31, 2002.
Fourth Quarter Performance
For the fourth quarter of 2002, revenue increased $1,007,720 or 15.4% to
7,556,037, from $6,548,317 for the same period in 2001. This increase is
attributed to the addition of new management contracts and the expansion of
services under existing contracts.
Net earnings for the fourth quarter of 2002 were $664,697, a decrease of
$278,792 from $943,489 for the same period of 2001. This decrease is
primarily attributed to the $199,634 decrease in income tax benefit related to
the Company's reduction of its remaining deferred tax valuation allowance in
the fourth quarter of 2002. Also contributing to the decrease was a $113,312
increase in interest expense, which is attributed to the payment of loan
termination fees when the Company refinanced its note payable in October 2002.
The refinancing of the Company's note payable will result in a significant
reduction in future interest expense.
Year-end Performance
For 2002, revenue increased $1,955,019 or 7.5% to $27,864,997, from
$25,909,978 for 2001. Fitness center management fees, consulting revenue and
ancillary program fees increased $1,760,878 or 7.1%, while occupational health
services revenue increased $194,133 or 23.1%. These increases are attributed
to the addition of new management contracts and the expansion of services
under existing contracts.
Net earnings increased $1,194,670 or 66.2% to $3,000,671 for 2002, from
$1,806,001 for 2001. This increase is primarily attributed to a $1,505,358
increase in income tax benefits related to the reduction of the Company's
remaining deferred tax valuation allowance. A $121,773 increase in gross
profit from the growth in revenue also contributed to the increase in net
earnings.
Offsetting these net earnings increases is a $174,438 increase in
operating expenses. This increase is due to a $748,793 increase in salary
expense, which was partially offset by a $574,355 decrease in selling, general
and administrative expenses. The increase in salaries expense is primarily
attributed to an investment in additional sales and marketing staff and
increased employee benefits costs. The decrease in selling, general, and
administrative expenses is due to lower contract employee and professional
service expenses, as well as the adoption of SFAS 142, which eliminated
amortization expense of $401,000 associated with goodwill and intangible
assets with indefinite lives. A $228,613 decrease in the gain from the sale
of the Company's IFCN subsidiary in January 2001 and a $57,067 increase in
interest expense also had a negative impact on 2002 net earnings.
Jerry Noyce, President and Chief Executive Officer, said, "We made
significant progress in a number of areas during 2002. The most significant
achievements include the following:
-- We increased our revenue 7.5% for 2002 compared to flat or decreasing
revenue for prior years. This growth affirms the decision we made at
the beginning of 2002 to invest additional resources to improve our
sales and marketing capabilities.
-- Through the addition of new contracts and expansion of existing
contracts, we increased the number of managed fitness center sites from
163 to 197.
-- We launched a suite of ancillary health and wellness services through
our Health Enhancement Program, which allowed us to increase our
ancillary program revenues by 113%.
-- We decreased our note payable balance by $1,137,715 to $304,589.
Because of the continuing improvement in our financial position, we
were able to refinance our note payable during the fourth quarter of
2002, which will result in a significant reduction in future interest
expense.
-- We improved working capital to $1,249,724 for 2002, compared to
$381,095 for 2001.
-- Our deferred tax assets increased $2,209,076 as a result of our
continued profitability and the resulting recognition of our remaining
deferred tax valuation allowance."
"In light of current economic conditions," Noyce concluded, "I am very
pleased with our financial results for 2002. Many of our current and
prospective customers have been hit by the economic downturn, but they
continue to believe a first-class health and wellness program is important to
their employees and company performance. Looking forward, we will continue to
focus on revenue growth by increasing our customer base and improving the
penetration of our Health Enhancement Program offerings. We will also focus
on enhancing our profitability by improving contract pricing and controlling
overhead costs. I believe the Company is well-positioned to improve upon its
position as the leading provider of fitness management and health enhancement
services."
Health Fitness Corporation is the leading provider of results-oriented
fitness, assessment, wellness, and occupational health services to
corporations, hospitals, universities and communities. HFC has been serving
clients since 1975 and manages approximately 200 sites across the U.S. and
Canada. For more information about Health Fitness Corporation, go to
http://www.hfit.com .
This press release contains forward-looking statements regarding
management's belief that the Company is well-positioned to improve on
historical results and its position as the leading provider of results-
oriented health and fitness solutions. These statements should be read in
conjunction with the various factors affecting the Company's operations and
financial condition discussed in the section titled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained
within the Company's Annual Report on Form 10-K for the year ended December
31, 2002. There is no assurance that the Company will be able to capitalize on
any of its plans regarding future results of the Company.
HEALTH FITNESS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ending Years Ending
12/31/02 12/31/01 12/31/02 12/31/01
Unaudited Unaudited
REVENUE $7,556,037 $6,548,317 $27,864,997 $25,909,978
COSTS OF REVENUE 5,977,702 5,117,485 21,938,385 20,105,139
GROSS PROFIT 1,578,335 1,430,832 5,926,612 5,804,839
OPERATING EXPENSES
Salaries 807,880 510,976 2,866,200 2,117,407
Selling, general,
and administrative 457,473 617,099 1,751,228 2,325,583
Total operating
expenses 1,265,353 1,128,075 4,617,428 4,442,990
OPERATING INCOME 312,982 302,757 1,309,184 1,361,849
OTHER INCOME (EXPENSE)
Interest expense (222,396) (109,084) (521,106) (464,039)
Gain on sale of
subsidiary - - - 228,613
Other, net 9,204 (14,725) 950 (26,707)
EARNINGS BEFORE
INCOME TAXES 99,790 178,948 789,028 1,099,716
INCOME TAX BENEFIT (564,907) (764,541) (2,211,643) (706,285)
NET EARNINGS $664,697 $943,489 $3,000,671 $1,806,001
NET EARNINGS PER SHARE
Basic $0.05 $0.08 $0.24 $0.15
Diluted 0.05 0.08 0.24 0.15
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 12,297,661 12,265,250 12,284,364 12,232,283
Diluted 12,400,022 12,429,049 12,428,440 12,433,715
HEALTH FITNESS CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
2002 2001
ASSETS
CURRENT ASSETS
Cash $91,658 $221,008
Trade and other accounts receivable, less
allowance for doubtful accounts of $83,500
and $84,700 at December 31, 2002 and 2001 4,036,888 3,388,856
Prepaid expenses and other 266,734 130,090
Deferred tax asset 731,500 777,300
Total current assets 5,126,780 4,517,254
PROPERTY AND EQUIPMENT, net 176,206 174,912
OTHER ASSETS
Goodwill 5,308,761 5,308,761
Intangible assets, less accumulated
amortization of $1,300 and $619,100 at
December 31, 2002 and 2001 6,380 186,737
Deferred tax assets 2,254,876 -
Other 82,808 11,410
$12,955,811 $10,199,074
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $304,589 $1,442,304
Trade accounts payable 409,150 141,736
Accrued salaries, wages, and payroll taxes 1,072,982 915,379
Other accrued liabilities 682,898 392,794
Deferred revenue 1,407,437 1,243,946
Total current liabilities 3,877,056 4,136,159
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 5,000,000
shares authorized, none issued or outstanding - -
Common stock, $0.01 par value; 25,000,000
shares authorized; 12,297,661 and 12,265,250
shares issued and outstanding at December 31,
2002 and 2001 122,977 122,653
Additional paid-in capital 16,997,367 16,982,522
Accumulated deficit (8,041,589) (11,042,260)
9,078,755 6,062,915
$12,955,811 $10,199,074
SOURCE Health Fitness Corporation
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Related links:
http://www.hfit.com
Company News On-Call:
http://www.prnewswire.com/comp/000921.html
CONTACT:
Wes Winnekins, Chief Financial Officer of
Health Fitness Corporation, +1-952-897-5275, wwinnekins@hfit.com
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